Summary
Official Ministry of Finance data show Japan made no purchases or sales of foreign currency in the market from December 29 through January 28, confirming that government efforts to support the yen during that period were limited to verbal warnings and diplomatic signals rather than direct intervention.
Market moves and reported checks
Following a Bank of Japan decision, the yen rose 1.7% on January 23 after trading close to an 18-month low against the dollar. The currency continued to gain over the next two sessions amid reports of so-called rate checks by finance officials in both Tokyo and Washington - a practice often preceding intervention and sometimes interpreted as the prelude to coordinated action to shore up the currency.
Despite those reports, money market indicators compiled by the Bank of Japan this week did not reveal the large outflows from domestic accounts that usually accompany active government intervention in the foreign exchange market.
Official comments and stance
Finance Minister Satsuki Katayama and senior currency official Atsushi Mimura declined to elaborate on the reported rate checks. Mimura reiterated that Japan would maintain close coordination with the United States on foreign exchange matters and would take appropriate steps as needed. Historically, Japanese authorities avoid confirming intervention even as they warn they are ready to counter one-sided, speculative moves in the currency.
Market context and reserve position
The yen gave back some of its weekly gains on Friday, slipping 0.5% to 153.79 per dollar. Tokyo retains substantial foreign exchange reserves, holding $1.16 trillion as of December, providing it with significant capacity to intervene should policymakers decide to do so.
Analysts emphasize that intervention can be a short-lived remedy. Rodrigo Catril, a currency strategist at National Australia Bank in Sydney, observed: "History tells you that intervention is only a temporary solution to a weaker currency." He noted there are "real and fundamental arguments as to why the yen is where it’s at."
Wider implications
The yen's extended slide alongside a surge in Japanese government bond yields to record levels has heightened investor concern about the country’s strained finances. This volatility arrives at a politically sensitive moment: Prime Minister Sanae Takaichi is seeking a mandate for her economic reflation agenda in a snap election set for February 8.
Tokyo's most recent direct interventions occurred in 2024, when the government spent a record 15.3 trillion yen - equivalent to $99.43 billion - to support the yen amid a sharp policy divergence between the Federal Reserve and the Bank of Japan. Market reporting uses an exchange rate reference of $1 = 153.8800 yen.
Conclusion
Ministry of Finance records for the covered month indicate no use of public funds in the FX market, suggesting authorities relied on signals and coordination rather than immediate purchases or sales of foreign currency to influence the yen's path.